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Case digest · Five-year prohibition on the alienation of homesteads (Sec. 118, C.A. No. 141); conditional sale; return of the down payment
Filinvest Land, Inc. vs. Backy
Seventeen grantees of public land in Tambler, General Santos City, entered into a deed of conditional sale with Filinvest Land, Inc., and on October 28, 1995 received a ₱14 million down payment for the lots whose patents had been issued in 1991. Filinvest argued that no actual transfer took place until all the conditions of the deed were fulfilled.
Facts
1986 and 1991
The respondents, fourteen Ngilays and three others, were grantees of agricultural public lands in Tambler, General Santos City. Seven of their original certificates of title were granted on November 11, 1986, and ten on November 24, 1991. The Court treated the 1991 lots as homesteads.
1995
Filinvest negotiated with the patriarch of the Ngilays, Hadji Gulam Ngilay. An undated Deed of Conditional Sale of the lots was executed, the grantees delivered the owner’s duplicate certificates of title to Filinvest, and on October 28, 1995 they received the down payment, ₱14 million, for the lots covered by the 1991 patents.
Filinvest’s account
According to Filinvest, its representatives saw that some of the properties were registered as land grants through homestead patents and that ten titles had been issued on November 24, 1991, so they told Hadji Gulam Ngilay that they would return in a few months to finalize the sale. The Ngilays, it said, prevailed upon them to make an advance payment and undertook to secure the necessary approvals of the DENR before the sale was consummated.
The suit
A few days later, the grantees came to know that the sale was void because it was made within the period when they were not allowed to sell and without the approval of the Secretary of the DENR. They filed a case in the Regional Trial Court of Las Piñas, Branch 253, for the declaration of nullity of the deeds of conditional and absolute sale and of a grant of right of way.
October 1, 2003
The trial court upheld the sale of all the properties. The 1986 lots were validly sold, it held, because their prohibitory period ended in 1991; the 1991 lots were covered by a deed of conditional sale whose conditions had to be complied with for there to be a perfected contract.
March 30, 2006
The Court of Appeals modified the ruling. It upheld the sale of the 1986 lots, but declared the deeds and the right of way agreement for the 1991 lots void, and ordered Filinvest’s titles to them cancelled and new titles issued to the grantees. Filinvest appealed, arguing that no transfer took place until the conditions were fulfilled and the deed was registered, that the transfer certificates of title to the ten lots were all dated 1998, after the five years, and, in the alternative, that the grantees should return what they had received.
Issue
Is a conditional sale of homestead land, made within five years of the patent, a conveyance barred by Sec. 118 of the Public Land Act, and must the grantees return the down payment?
Ruling
Yes on both counts. The Court denied Filinvest’s petition and affirmed the Court of Appeals, with the modification that the grantees return the ₱14 million down payment.
Sec. 118, as amended by C.A. No. 456, sets a five-year prohibitory period following the issuance of the homestead patent. It aims to give the homesteader and his family every chance to keep the land that the State gave him gratuitously, and any act that would remove the land from the grantee’s hands is struck down. The negotiations for the 1991 lots were made in 1995, and those lots could be alienated only after November 24, 1996, so the sale, consummated on October 28, 1995, was void. Filinvest’s argument that a conditional sale is not an “alienation or encumbrance” failed, because the prohibition does not distinguish between consummated and executory sales. The Court quoted the Court of Appeals: where a sale is perfected within the five years, a formal deed executed after the period “DID NOT and COULD NOT legalize a contract that was void from its inception.” On the money, the Court agreed with Filinvest. The declaration of nullity of a void contract restores things to their state before it was executed, and letting the grantees keep the down payment would be unjust enrichment, so they must return the ₱14,000,000.00. The ruling of the Court of Appeals that the sale of the 1986 lots was valid stood.
“The prohibition does not distinguish between consummated and executory sale. The conditional sale entered into by the parties is still a conveyance of the homestead patent.”
Doctrine
A conveyance of a homestead within five years from the issuance of the patent is void, whatever stage the sale has reached: “…the conveyance of a homestead before the expiration of the five-year prohibitory period following the issuance of the homestead patent is null and void and cannot be enforced, for it is not within the competence of any citizen to barter away what public policy by law seeks to preserve.” Because the contract is void, the parties go back to where they were before it: “Petitioner is correct in its argument that allowing respondents to keep the amount received from petitioner is tantamount to judicial acquiescence to unjust enrichment.”
Compare: a quitclaim, the same result
In Flores vs. Bagaoisan, G.R. No. 173365, April 15, 2010, homestead land was conveyed three years after the patent through a “Deed of Confirmation and Quitclaim”, and the Court held: “Labeling the deed as a confirmation of non-ownership or as a quitclaim of rights would actually make no difference, as the effect would still be the alienation or conveyance of the property.”
Bar tip
Within the five years, ask only whether there was a conveyance, not what stage the sale had reached: the prohibition “does not distinguish between consummated and executory sale.” Count from each lot’s own patent, as the courts did with the 1986 and 1991 lots, and remember that, as Filinvest held, a void sale means the price is returned too. Filinvest was decided in 2012, before R.A. No. 11231, and the Court treated its 1991 lots as homesteads; that law, by its words, lifted the restrictions on agricultural free patents issued under Sec. 44 of C.A. No. 141.
Hear it explained
Land Titles Jurisprudence Ep. 8, at 4:18
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This digest is general legal information for education, not legal advice, and it is not a substitute for reading the decision. Quoted passages are taken word for word from the full text.